2018 Ohio 2325
Ohio Ct. App.2018Background
- Property: McDonald’s at 2901 Wilmington Pike (constructed 2012, ground lease). Auditor valued it at $1,402,840 for tax year 2014; owner Ryne sought reduction to ~$1.08M; BOR reduced value to $1,118,870 after owner’s evidence.
- BTA hearing (no BOR record existed) included appraisals from owner’s expert Stephen J. Weis (final opinion $1,115,000) and Kettering BOE’s expert Thomas D. Sprout (opinion $2,055,000).
- Both appraisers used sales-comparison and income-capitalization approaches; Weis treated highest-and-best use as "restaurant" generally and relied more on local (Montgomery County) comparables including sit‑down restaurants; Sprout defined highest-and-best use as a fast‑food restaurant and used fast‑food comparables from a broader Ohio market.
- BTA found Sprout’s analyses and comparables more probative (emphasizing fast‑food comparables and resulting cap rate/tax additur), criticized both parties for inadequate cost approach development, and adopted Sprout’s $2,055,000 valuation.
- Trial court (Ohio 2d App. Dist.) affirmed the BTA, finding its weighing of competing appraisals reasonable and lawful.
Issues
| Issue | Plaintiff's Argument (Kettering BOE) | Defendant's Argument (Ryne) | Held |
|---|---|---|---|
| Burden and evidentiary posture after BOR reduction | BOE must rebut BOR’s owner‑based reduction by producing competent valuation evidence; BOE offered Sprout’s appraisal | Ryne relied on BOR reduction and Weis’s appraisal to resist BOE’s higher valuation | Court applied Bedford rule: BOE had burden to establish new value on appeal and BTA reasonably found BOE met that burden with Sprout’s appraisal |
| Choice of comparables / geographic scope | Use comparables that reflect subject’s highest‑and‑best use (fast‑food), even if outside county | Emphasize local (Montgomery County) comparables; criticize out‑of‑county picks as improper | BTA reasonably credited Sprout’s out‑of‑county fast‑food comparables over Weis’s local but dissimilar comparables |
| Capitalization rates and income approach reliability | Sprout’s cap rate based on fast‑food net‑lease market (7% base; 10.44% w/ tax additur) reflected subject market | Weis argued some comparables had stronger credit and Weis’s cap rate (8.17% with additur) was more appropriate | Court found Sprout’s cap‑rate selection and supporting evidence reasonable and not unlawful; BTA properly weighed competing rates |
| Expert credibility, special‑purpose characterization, and adjustments | Sprout qualified; qualitative adjustments permissible; highest‑and‑best use is fast‑food not general retail | Ryne attacked Sprout’s qualifications, consistency, and use of qualitative adjustments; argued Sprout treated property as special‑purpose | Court held BTA reasonably found Sprout competent and his methods credible; Sprout did not appraise as special‑purpose and qualitative adjustments are acceptable |
Key Cases Cited
- Shinkle v. Ashtabula Cty. Bd. of Revision, 135 Ohio St.3d 227 (establishes appellant’s burden to prove a change in valuation on appeal)
- Bedford Bd. of Edn. v. Cuyahoga Cty. Bd. of Revision, 115 Ohio St.3d 449 (describes effect when BOR adopts owner’s evidence and burden shifts on appeal)
- Dublin City Schools Bd. of Edn. v. Franklin Cty. Bd. of Revision, 147 Ohio St.3d 38 (applies Bedford rule to burden and valuation evidence)
- NWD 300 Spring, L.L.C. v. Franklin Cty. Bd. of Revision, 151 Ohio St.3d 193 (standard: affirm BTA if decision is reasonable and lawful; deference to taxing authorities on factfinding)
- EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 1 (BTA’s duty to weigh evidence and credibility of appraisals)
- Johnston Coca-Cola Bottling Co. v. Hamilton Cty. Bd. of Revision, 149 Ohio St.3d 155 (present use cannot automatically exclude other value considerations; guidance on comparables)
- Rite Aid of Ohio, Inc. v. Washington Cty. Bd. of Revision, 146 Ohio St.3d 173 (rejecting appraisal that treated property as special‑use without justification)